Comment by webwright | Hacker News Reader

Comment by webwright | Hacker News Reader

I think a lot of "bulk" investors feel that trying to guess the success of early stage companies is a lot like trying the guess the success of a person when they are still in the womb. I'm always amused at the extensive diligence you see with some early stage investors-- diligence where Google or Facebook wouldn't have passed muster. I remember Joe Kraus recalling that someone passed on investing early in Excite because they said, "Who's going to SEARCH the internet? They'll just find the sites they like and bookmark them!"

I think it makes sense to get a gut feeling of the founding team (Can they sell? Do they have a passion for the space? Do they seem like they are in it for the long haul? Do they seem willing to pivot?) and it makes sense to hear/believe the narrative of the market size ( http://is.gd/ceLQU ), etc. Every investor is going to have the secret trait/quality in a founder/market that they think is critical.

But trying to guess what founders and markets are going to do over a period of 7+ years shouldn't be about dozens of hours of diligence.

Better said than I could have done.

I do like to get a sense that the company could either be big or is likely to be acquired; I prefer the first as the second is hard to judge.

how do you asses the potential size of a market when it comes to early startups? instinct?

I work in the opposite direction: Is it too small?

Apologies if you've posted on this before/elsewhere, but what do you specifically look for when deciding: team, product, market? Is there one that is more important than the others?

Even though we are not raising, the idea of raising money from someone who is actively part of the HN community is quite appealing. I think that speaks a lot about the character of the investor. Just like investors look at team, I think startups also look at the 'people' side of thier investors.

EDIT: I just saw a similar question cross-posted on your AMA post, so no need to answer here. My bad for not noticing that post first. Great stuff there!

EDIT2: Would love to know why the downvote after my first edit?

Well said. I'm doing the kind of diligence you're recommending. My point was that I at least cannot get a good sense of the founders in one meeting. I need to build a relationship and see how they're approaching product, market and customer acquisition even though I don't care about particular projections.

I guess my point is that the product IS the sense of the founders I am trying to get.

I think one can get a good sense of a team's approach within an hour long meeting.

My gut reaction is usually right, but I guess I don't trust it completely yet. Also, I don't need to meet in person more than once, or in some cases at all, but I usually have follow up questions that I want answered.

An hour long meeting will get you a good feeling if the feeling is good, or bad. If there is doubt then you may need (possibly a lot) more time.

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